EDITORIAL: Corporate collapse a concern
The year has opened with the news being mainly about the by-election campaign in St John and the impact of the increase on the Value Added Tax on the cost of living, and whether there should have been a reduction in the cost of some food items.
Also getting attention has been the CLICO matter and the appointment of a judicial manager to unravel those problems. All this following debate in Parliament on the Financial Services Commission (FSC) and the need for tighter regulation of the financial sector in order to avoid the situation into which that well known regional company has found itself.
We have already welcomed the establishment of the FSC, and we hope that it will be properly staffed with well qualified people who have had some exposure to the world of work and business, and whose experience is not simply confined to theoretical exposure in the classroom.
We make this point because in the real world it is harder to find the just solution than in the abstract confines of the classroom, and there are many real life business decisions which can only truly be solved by reference to the pragmatism which is so necessary a component of life outside academia.
The collapse of companies, resulting, for example, in the demise of the Bank of Commerce and Credit International deserves critical scrutiny, because such collapses are not the result of some act of God. They are quite simply the result of bad decisions, or worse, decisions made with an eye to interests other than those of the companies and their investors or depositors.
And it is because these collapses cause so much social dislocation and personal distress that examination and enquiry into the causes of the respective collapses are necessary, so that the malady is not repeated to the peril and damage of the social fabric of our society.
The financial services company, on the other hand, is selling a product or rendering a service which has long-term implications and connections with the purchaser; and the failure of anyone connected with such companies either as directors, controllers or regulators to respect the statutory guidelines, may have serious consequences for consumers dealing with such companies in good faith. Hence the need for effective regulation!
The collapse of CLICO group and the continuing saga of the Great Northern Insurance Company’s operations in this country are two matters which remain unresolved. There are many Barbadians with interests in the resolution of the problems of these two entities. In Great Northern’s case we understand a statutory fund exists which can be used to satisfy outstanding obligations in whole or in part and it cannot be right that the matter of the cessation of business of the Great Northern has been allowed to remain unresolved for such a considerable length of time.
We are not interested in the “political foot balling” of these companies and their related issues, but the collapse of financial service companies is an issue deserving the highest national attention.
Apart from a transparent public enquiry into these two companies, urgent action is required to resolve the anxieties of Barbadians affected. At least CLICO is to be placed under judicial management, and to that extent there is light, however dimly lit at the distant end of that tunnel. But what about Great Northern? What action is contemplated thereon?